Alternative Investment Strategies
We have identified alternative investing strategies that have the potential to increase an overall portfolio’s expected return, decrease its risk and make it more resilient to different economic environments. With diligent care, we believe these alternative strategies can be an effective complement to traditional asset classes.
Event Driven seeks to capture mispricing between highly related securities, as when a company’s shares trade on different exchanges at different prices, or a convertible bond trades for less than the value of its components.
Fixed Income seeks to capture relative value views across issuers, industries, countries and ratings.
Macro investing seeks to benefit from mispricings and dislocations in stock, bond, currency and commodity markets by going long assets that the data suggest are undervalued and short those that are overvalued.
Managed Futures focuses on capturing trends in global stock, bond, currency and commodity markets.
Multi-Strategy offers a diversified approach to alternatives investing, seeking to provide broad exposure to several different strategies — such as arbitrage, stock selection and macro — at the same time.
Real Return investing involves actively managing a diversified portfolio of liquid, inflation-sensitive assets, designed with the objective to benefit from increases in inflation.
Stock Selection seeks to profit from market inefficiencies in individual stocks, as when a stock’s price appears higher or lower than the company’s intrinsic value indicates it should be.
Style Premia seeks to harvest the return premia from value, momentum, carry and defensive themes across asset classes and geographies.
Long/Short Equity involves buying stocks we expect to do well and short selling those we expect to do poorly, seeking to provide investors equity-like returns with less volatility.
Risk Parity is a strategy that diversifies across global, liquid asset classes by risk, seeking to build a portfolio that is not reliant on any single asset class for long-term performance.
Traditional Investment Strategies
Our traditional strategies seek to take full advantage of sources of returns that have generated long-term outperformance in the past, and, based on our rigorous evaluation, are expected to continue to do so in the future.
Defensive Equity seeks to build a lower-risk portfolio by overweighting stocks that exhibit higher quality and are less volatile relative to an index and underweighting lower quality, more-volatile stocks.
Diversified Equities strategies employ alpha signals from our absolute return strategies and seek to beat equity benchmarks. International funds also consider the performance of each country and currency.
Momentum strategies seek to profit from the tendency of outperforming stocks to continue to outperform, a phenomenon that has been studied extensively and shown to be pervasive across markets and asset classes.
Multistyle strategies seek to outperform a benchmark, such as the Russell 1000, by focusing on stocks that are deemed attractive on the basis of factors such as valuation, momentum and profitability.
AQR’s tax advantaged solutions aim to improve the after-tax risk-adjusted returns available to qualified investors globally.
Tax-Advantaged Equity Market Neutral seeks to deliver alpha that is uncorrelated to the market, with a focus on being tax-efficient and potentially tax-beneficial across an investor's entire portfolio.
Environmental, Social and Governance (ESG) Investing
AQR is committed to helping our clients achieve their Environmental, Social and Governance (ESG) goals. We provide investors a variety of options to achieve ESG objectives.
Restricted lists in separately managed accounts
Option to apply an investment exclusion based on ESG criteria in a separately managed account
ESG-related factors in our equity portfolios
Option to invest in equity portfolios that include Governance-related factors as part of our portfolio construction
We provide managed-account clients the option to incorporate ESG considerations in proxy voting.
AQR acknowledges that Environmental, Social and Governance (ESG) factors may have both direct and indirect impacts on corporate profitability, long-term portfolio performance and risk. With this in mind, our primary objective for considering ESG issues is to improve the financial characteristics of our clients’ investments.
AQR’s ESG framework is built on an economic model that considers ESG issues as externalities imposed on society that are not fully priced into the value of the company or related security. The mispricing of these externalities has the potential to encourage inappropriate corporate decisions - some of which may present investment risks while others may lead to potential profit opportunities.
Research and empiricism are at the core of AQR and we believe in applying an objective research process to evaluate the merits and efficacy of all investment strategies, including ESG criteria. We look for investment criteria or signals that are firmly grounded in economic theory and lead to measurable improvements in risk-adjusted returns.
We recognize that investors may have other motivations for ESG investing, including upholding value or ethical standards and/or promoting ESG accountability of companies to benefit society as a whole. AQR believes it can best address these preferences in client-specific mandates that are customized for each investor’s unique preferences and circumstances.
In applying our ESG Philosophy, AQR has adopted the following guiding principles:
AQR does not provide legal, tax or accounting advice. Investors should conduct his or her own analysis and consult with professional advisors prior to making any investment decisions.